DCIT, New Delhi V. M/s Ikea Trading (India) P ltd., New Delhi

ITA 5393/DEL/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7575 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 01-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: ANANYA
• Keywords: Capital asset; Depreciation; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: C NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO: 5393/DEL/2010 AY: - 2005-06 DY. COMMISSIONER OF INCOME TAX, VS. M/S. IKE A TRADING (INDIA) P LTD. CIRCLE II (1), ROOM NO. 312, C -16, SECOND FLOOR C-BLOCK C.R. BUILDING MARKET, PASCHIMI MARG, VASANT VIHAR, NEW DELHI. PAN AAACI1483Q (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI T. VASANTHAN, SR DR ASSESSEE BY : S/SHRI SALIL KAPOOR, SUMIT LAL CHANDANI, ADV AND MS. ANANYA KAPOOR, ADVOCATE DATE OF HEARING : 8.3. 2016 DATE OF PRONOUNCEMENT: 02.06.2016 O R D E R PER PRASHANT MAHARISHI, ACCOUNTANT MEMBER 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT(A) XIII NEW DELHI VIDE ORDER DATED 30 TH SEPTEMBER, 2010 TREATING THE EXPENDITURE ON REPAIR AND MAINTENANCE OF RS. 1,44,2 5,239/- AS REVENUE EXPENDITURE AND DELETING THE ADDITION MADE BY THE L D. AO. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN :- I. THE ORDER OF LD. CIT (A) IS WRONG, PERVERSE, ILLEGA L AND AGAINST THE PROVISIONS OF LAW, LIABLE TO BE SET ASIDE. ITA NO. 5393/DEL/2010 2 2 0X5 II. THE LD. CIT (A) ERRED IN TREATING THE EXPENDITU RE ON REPAIR AND MAINTENANCE OF RS. 1,44,25,239/- AS REVENUE EXPENDI TURE AND DELETING THE ADDITION MADE BY THE LD. AO. III. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE IS A C OMPANY ENGAGED IN THE BUSINESS OF TRADING OF DIFFERENT PRODUCTS SUCH AS C ARPETS, TEXTILE, METAL, PLASTIC ITEMS ETC. THE COMPANY PURCHASES THESE PROD UCTS LOCALLY AND EXPORTS THEM. FOR THE ASSESSMENT YEAR 2005-06 IT FI LED ITS RETURN OF INCOME ON 28 TH OCTOBER, 2005 DECLARING AN INCOME OF RS. 15,88,70, 103/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE COMPANY HAS DEBITED EXPENSES OF RS. 20,988,343/- ON ACCOUNT OF REPAIR AND MAINTENANCE OF BUILDING EXPENDITURE. ASSESSEE W AS ASKED TO EXPLAIN NATURE OF SUCH HUGE EXPENDITURE AND IN RESPONSE TO THAT ASSESSEE SUBMITTED THAT THESE EXPENSES RELATE TO EDP MAINTEN ANCE CHARGES, MAINTENANCE CHARGES FOR ELECTRICAL ITEMS ACCOMMODAT ION PROVIDED TO EXPATRIATE EMPLOYEES, CLEANING CHARGES, POOL AND GA RDEN EXPENSES ETC. THESE ARE THE NECESSARY EXPENDITURE ON REPAIRS OF V ARIOUS FITTINGS INSTALLED IN ITS OFFICE PREMISES. LD. AO HELD THAT OUT OF THE ABOVE EXPENDITURE EDP MAINTENANCE COST OF RS. 22,32,507/-, UPKEEP MAINTEN ANCE OF OFFICE BUILDING OF RS. 1,97,358/-, REPAIR AND MAINTENANCE OF OFFICE PREMISES OF RS. 15,76,638/-, LEASE RENTALS OF RS. 44,11,920/-, SECURITY COSTS OF RS. 53,87,700/- AND CLEANING CHARGES OF 6,19,116/- AMOU NTING IN ALL TO RS. ITA NO. 5393/DEL/2010 3 2 0X5 14,425,239/- ARE IN NATURE OF CAPITAL EXPENDITURE AND THEREFORE IT WAS HELD THAT THESE EXPENSES ARE IN NATURE OF REPAIRS AND RENOVATION OF BUILDING WHICH IS NOT OWNED BY THE ASSESSEE AND HE NCE DISALLOWED AS CAPITAL EXPENDITURE. LD. AO FURTHER ALLOWED DEPRECI ATION @ 10% ON THESE EXPENSES. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A) WHO IN TURN DELETED THE DISALLOW ANCE HOLDING THAT THESE ARE ALL REVENUE EXPENDITURE. AGGRIEVED BY THE ORDER OF LD. CIT (A) REVENUE HAS PREFERRED THIS APPEAL AS PER GROUNDS ME NTIONED ABOVE. 3. GROUND NO. 1 OF THE APPEAL IS GENERAL IN NATURE AND THEREFORE DISMISSED. 4. GROUND NO. 2 OF THE APPEAL IS AGAINST THE ORDER OF LD. CIT (A) HOLDING THAT EXPENDITURE ON REPAIR AND MAINTENANCE OF RS. 1 4,425,239/- IS REVENUE EXPENDITURE. 5. BEFORE US, THE LD. DR SUBMITTED THAT LD. CIT (A) HA S DELETED THE DISALLOWANCE BY ADMITTING THE NEW EVIDENCES. HE FUR THER SUBMITTED THAT THERE IS NO DOCUMENTARY EVIDENCE SUBMITTED BY THE A SSESSEE ABOUT THE NATURE OF THE CLAIM OF THE EXPAT EMPLOYEES AND THEI R WORK DETAIL AND WHY THE EXPENDITURE INCURRED IS TREATED AS REVENUE EXPE NDITURE. HE FURTHER SUBMITTED THAT THE TERMINOLOGY OF THE EXPENDITURE I S NOT TO BE SEEN BUT THE NATURE OF EXPENDITURE IS REQUIRED TO BE SEEN. HE FU RTHER STATED THAT EVEN OTHERWISE, THE EXPENDITURE IS NOT CURRENT REPAIRS B UT ACCUMULATED REPAIRS AND THEREFORE NO DEDUCTION OF SUCH EXPENDITURE SHOU LD HAVE BEEN ALLOWED. HE FURTHER SUBMITTED THAT BEFORE THE CIT ( A) ONLY THE SAMPLE ITA NO. 5393/DEL/2010 4 2 0X5 EVIDENCES OF THE EXPENDITURE IS SUBMITTED AND NOT ALL DETAILS OF EXPENDITURE WAS PROVIDED WHICH DOES NOT JUSTIFY THE DELETION OF THE ADDITION. HE FURTHER STATED THAT THE EXPENDITURE OF RS. 15,76,638/- INCURRED ON THE PREMISES ARE IN THE NATURE OF THE A CCUMULATED REPAIRS, PERSONAL EXPENSES OF EMPLOYEES, SPEED MONEY AND PRI OR PERIOD EXPENSES. HE FURTHER SUBMITTED THE DETAILS OF EXPENDITURE AT PAGE NO. 762, 765, 771, 786-790, 836, 842 846, 866 AND 1277 TO 1280. THES E PAGES SHOW THAT EXPENSES ARE OF THE ACCUMULATED REPAIRS, PERSONAL E XPENSES OF EMPLOYEES, SPEED MONEY AND PRIOR PERIOD EXPENSES. THEREFORE, I T WAS SUBMITTED THAT THESE EXPENSES SHOULD NOT HAVE BEEN ALLOWED AS REVE NUE EXPENDITURE AND THE LD. CIT (A) HAS DELETED THE DISALLOWANCE AFTER ADMITTING THE ADDITIONAL EVIDENCES. HE RELIED UP ON THE DECISION OF HONOURABLE SUPREME COURT IN CIT V SAVARANA SPINNING MILLS LIMI TED [293 ITR 201(SC)] TO STATE THAT ACCUMULATED REPAIRS IS A NOT ALLOWABLE. HE FURTHER REFERRED TO THE DECISION OF HONOURABLE SUPREME COUR T IN CASE OF DEEPAK AGRO FOODS V STATE OF RAJASTHAN ( 2008-TIOL-134-S C-CT] AND HON DELHI HIGH COURT IN CASE OF CIT V JAN SAMPARAK ADV ERTISING LIMITED [ 56 TAXMANN.COM 286 (DEL)] 6. AGAINST THIS, LD. AR SUBMITTED THAT THESE ARE THE E XPENSES INCURRED BY THE ASSESSEE ON PREMISES THAT ARE NOT OWNED BY THE ASSE SSEE BUT ON RENTED PREMISES. HE SUBMITTED THE COMPLETE DETAILS IN THE FORM OF VOUCHERS, BILLS ETC, OF EXPENDITURE SUBMITTED BEFORE AO AND BEFORE LD CIT (A). HE ITA NO. 5393/DEL/2010 5 2 0X5 SUBMITTED THAT GENUINENESS OF THE EXPENDITURE HAS N OT BEEN DOUBTED BY THE LD. AO BUT ONLY ISSUE IS WHETHER THIS EXPENDITU RE ARE CAPITAL OR REVENUE IN NATURE. HE FURTHER SUBMITTED THAT THE UN DISPUTEDLY THESE ARE REPAIR AND MAINTENANCE EXPENDITURE AND ASSESSEE HA S NOT DERIVED ANY BENEFIT OF ENDURING NATURE, NO CAPITAL ASSETS IS AC QUIRED AND THEY ARE IN THE NATURE OF ROUTINE ORDINARY DAY TO DAY EXPENSES ON M AINTENANCE OF EQUIPMENTS, CLEANING CHARGES, ETC. AND IN CASE OF RENTED PREMISES EVEN ACCUMULATED REPAIRS EXPENDITURE ARE ALLOWABLE AS RESTRICTIONS APPLIES WHEN THE ASSESSEE OWNS THE BUILDING AND CLAIMS DEPR ECIATION THEN ONLY CURRENT REPAIR EXPENDITURE AND NOT ACCUMULATED REPA IRS IS ALLOWABLE. REGARDING THE OBJECTION OF THE LD. AR ON ADMISSION OF THE NEW EVIDENCE, HE SUBMITTED THAT THERE IS NO SUCH GROUND IN THE AP PEAL OF THE REVENUE. FURTHER, HE SUBMITTED THAT THE LD. CIT (A) HAS DELE TED THIS DISALLOWANCE AFTER OBTAINING REMAND REPORT OF THE LD. AO. HE REF ERRED TO VARIOUS EXPENDITURE AND STATED THAT THEY ARE NEITHER SPEED MONEY AND NOR PERSONAL EXPENDITURE. HE ALSO TOOK US THROUGH THE DETAILS OF THE EXPENDITURE POINTED OUT BY THE LD. DR. THEREFORE, HE SUBMITTED THAT THE LD. CIT (A) HAS CORRECTLY DELETED THIS DISALLOWANCE HOLDING THA T THE EXPENDITURE INCURRED BY THE ASSESSEE ARE REVENUE IN NATURE. HE FURTHER TOOK US TO THE PARA NO. 2.1 OF THE ORDER OF THE LD. CIT(A) WHEN TH E FINDINGS ON THESE EXPENDITURE HAS BEEN GIVEN BY THE LD. CIT(A) HOLDI NG THAT THE EXPENDITURES ARE INCURRED ON RENTED PREMISES THEY A RE IN THE NATURE OF THE ITA NO. 5393/DEL/2010 6 2 0X5 FLOWER SUPPLY, TELEPHONE REPAIR MACHINE REPAIR ETC. HE ALSO SUBMITTED THAT THE MANY OF SUCH EXPENSES ARE ANNUAL MAINTENANCE CO NTRACT FEES, MINERAL WATER CHARGES ETC. HE IN THE END SUMMARISED THAT TH E EXPENDITURE ARE MISCELLANEOUS EXPENSES, REPAIR EXPENSES OF PLANT AN D MACHINERY, SECURITY CHARGES, CLEANING CHARGES. NO NEW ASSETS HAS BEEN P URCHASED BY THE ASSESSEE AND IT IS FUNCTIONING ON RENTED PREMISES. REGARDING THE DECISION OF HONOURABLE SUPREME COURT RELIED UP ON BY THE LD DR HE PLACED RELIANCE ON DECISION OF BHARAT GEARS LIMITED V CIT [ 337 ITR 368 (DEL)] WHERE REPAIRS EXPENDITURE WAS ALLOWED CONSIDERING T HE DECISION OF HONOURABLE SUPREME COURT. 7. IN THE REJOINDER LD. DR SUBMITTED THAT IT HAS FO R THE FIRST TIME COME TO THE NOTICE OF THE REVENUE THAT BUILDING IS NOT OWNE D BY THE ASSESSEE AND LD. CIT(A) HAS DELETED THE ADDITION AFTER ADMITTING THE NEW EVIDENCES WITHOUT GOING INTO THE DETAILS OF SUCH EXPENDITURE AND THEREFORE DISALLOWANCE DELETED BY THE LD. CIT(A) IS INCORRECT . HE FURTHER SUBMITTED THAT IT IS FOR THE HIGHER AUTHORITIES TO CURE THE D EFECT IN THE ORDER OF LOWER AUTHORITIES AND THEREFORE RELYING ON THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF M/S. DEEPAK AGRO FOODS VS. STA TE OF RAJASTHAN & ORS (2008)-TIOL-134-SC-CT AND HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. M/S. JANSAMPARK ADVERTISING AND MARKETIN G (P) LTD. (SUPRA) REQUESTED THAT MATTER MAY BE SET ASIDE BACK TO THE FILE OF THE AO. HE FURTHER SUBMITTED THAT ACCORDING TO SUB RULE 3 OF R ULE 46A NO EVIDENCE ITA NO. 5393/DEL/2010 7 2 0X5 CAN BE TAKEN INTO ACCOUNT UNLESS THE AO HAS BEEN GI VEN REASONABLE OPPORTUNITY TO EXAMINE AND REBUT THE SAME. FOR THES E PROPOSITIONS, HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MANISH BUILD WELL PVT. LTD. [ITA NO 9258/2011 DATED 15.11.2011]. AGAINST THIS LD. AR SUBMITTED THAT MATTER SHOULD NO T BE REMITTED BACK TO THE FILE OF THE AO AND FOR THIS HE SUBMITTED A NOTE RELYING ON THE DECISION OF M/S.ZUARI LEASING & FINANCE COMPANY LIMITED V IT O. 112 ITD 205 (DELHI) AND SEVERAL OTHER DECISIONS. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE HAS INCURRED FOLLOWING EXPEND ITURE AND SAME WERE HELD TO THE CAPITAL EXPENDITURE :- PARTICULARS AMOUNT (IN RS.) EDP MAINTENANCE COST 22,32,507 UPKEEP MAINTENANCE AT OFFICE BUILDING 1,97,358 REPAIR AND MAINTENANCE OFFICE PREMISES 15,76,638 LEASE RENTALS 44,11,920 SECURITY COSTS 53,87,700 CLEANING COSTS 6,19,116 TOTAL 1,44,25,239 9. IT IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF THAT THE EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE ON RENOVATION AND REPAIR O F BUILDING, WHICH IS NOT OWNED, BY THE ASSESSEE. THIS FACT HAS BEEN RECO RDED ON THE LAST PAGE OF THE ASSESSMENT ORDER WHEREIN THIS FACT HAS BEEN RECORDED BY THE AO ITA NO. 5393/DEL/2010 8 2 0X5 THAT THE BUILDING IS NOT OWNED BY THE ASSESSEE. THE REFORE, THE ARGUMENT OF THE LD DR THAT IT HAS COME TO THE NOTICE OF REVENUE NOW IS NOT CORRECT. THE NATURE OF EXPENDITURE WHICH IS BEING DISALLOWED BY THE AO HOLDING THAT THAT THEY ARE CAPITAL EXPENDITURE ARE IN THE NATURE OF A) EDP MAINTENANCE COST PERTAINING TO PURCHASE OF PRIN TER CARTRIDGE PRINTER FUSER AND REPAIRING EXPENDITURE O F VARIOUS COMPUTER EQUIPMENTS. B) LEASE RENT OF RS. 44,11,920/- WAS PAID TO M/S. AB H OTELS LTD. AS PER MAINTENANCE AGREEMENT ENTERED INTO WITH THAT COMPANY. ACCORDING TO THAT AGREEMENT, THE ASSESSEE IS ENTITLED TO USE AIR CONDITIONERS, LIFTS AND OTHER B UILDING FACILITIES, WHICH ARE MAINTAINED BY M/S. AB HOTELS LTD. C) THE SECURITY CHARGES ARE PAID TO AN OUTSIDE SECURIT Y AGENCY FOR SECURITY OF OFFICE PREMISES AND RESIDENTIAL PRE MISES OF THE EMPLOYEES OF THE ASSESSEE COMPANY. D) REPAIRS AND MAINTENANCE OF OFFICE PREMISES INCLUDES EXPENDITURE SUCH AS PLUMBING CHARGES, PHOTOCOPY CHA RGES AND BINDING CHARGES ETC. E) CLEANING CHARGES HAVE BEEN PAID FOR ITS OFFICE PREM ISES TO AN OUTSIDER MONTHLY BASIS. LD. CIT(A) HAS DELETED THIS DISALLOWANCE AFTER OBTA INING REMAND REPORT FROM THE LD. AO . IN THE REMAND REPORT THE LD. AO H AS REITERATED THE ITA NO. 5393/DEL/2010 9 2 0X5 ARGUMENT ON WHICH DISALLOWANCE IS MADE. ON EXAMINA TION OF THE EVIDENCE SUBMITTED BY THE ASSESSEE AND ON THE BASIS OF REMAND REPORT SUBMITTED BY THE LD. AO , LD. CIT(A) HAS DELETED TH E DISALLOWANCE IN PARA 2.1 OF HIS ORDER AS UNDER :- 2.1 FINDING ON GROUND OF APPEAL NO. 2 :- I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS FILED BY THE APPELLANT AS ALSO THE BREAK UP OF THE PAYMENTS UNDE R THE HEAD EDP MAINTENANCE COST: LEASE RENTALS: SECURITY COST: REPAIR AND MAINTENANCE OF OFFICE PREMISES, CLEANING CHARGES AN D UPKEEP MAINTENANCE AND OFFICE BUILDING. FURTHER THE BILLS/ VOUCHERS FILED BY THE APPELLANT VIDE PAPER BOOK ON SEVERAL OCCASIONS AND THE BALANCE VOUCHERS FILED VIDE LETTER DATED 27.9.10 HA VE ALSO BEEN CROSS VERIFIED BY ME WITH REFERENCE TO THE BREAK U P OF THE ABOVE EXPENSES. IT IS CLEAR FROM THE BREAK UP AND UPON VE RIFICATION OF VOUCHERS THAT EDP MAINTENANCE COST AMOUNTING TO RS . 22,32,507/- HAS BEEN ON ACCOUNT OF EXPENDITURE TOWARDS PAYMENT OF ANNUAL MAINTENANCE CONTRACT FOR VARIOUS EDP PERIPHERALS, P URCHASE OF PRINTER TONER CARTRIDGE, INK PRINTER FUSER AND REP AIRS OF VARIOUS EDP PERIPHERALS. LIKEWISE THE LEASE RENTAL AMOUNTIN G TO RS. 44,11,9201- HAS BEEN PAID TO M/S AB HOTELS LTD. WIT H WHICH TILE APPELLANT HAS ENTERED IN MAINTENANCE AGREEMENT FOR ITS REGISTERED OFFICE AT RADISSON COMMERCIAL PLAZA NEW DELHI. AS PER THE SAID AGREEMENT A MAINTENANCE CHARGE TOTALLING TO RS. 44. 11.920/- (RS. 3,67,660/- PER MONTH @ 12 MONTHS) HAS BEEN PAID TO M/S AB HOTELS LTD. FOR THE LATTER HAVING PROVIDED THE APPE LLANT THE USE OF FACILITIES LIKE AIR CONDITIONING PLANT. GENERATORS, COMPRESSORS, ELECTRIC INSTALLATION, LIFTS, FIRE-FITTING EQUIPMEN T ETC. WHICH HAS BEEN OPERATED AND MAINTAINED. BY M/S A.B. HOTELS LTD. AN AMOUNT OF RS. 53,87.700/- HAS BEEN INCURRED AS EXPENDITURE TO SEC URITY CHARGES TO PROFESSIONAL BEEN MADE TO PROFESSIONAL SECURITY AGE NCIES LIKE GROUP-4 EXPAT; BLACK FOX SECURITY EXPAT ETC. THESE SECURITY AGENCIES WERE DEPLOYED BY THE APPELLANT AT THE OFFI CE PREMISES AND ACCOMMODATION OF VARIOUS EXPATRIATE EMPLOYEES WORKI NG FOR THE APPELLANT. AN AMOUNT OF RS. 15,76,638 HAS BEEN PAID BY THE APPELLANT TOWARDS VARIOUS REPAIRS FOR THE MAINTENAN CE OF OFFICE PREMISES SUCH AS PLUMBING WORK, EXPENSES FOR PHOTOC OPYING, PAPER TOWEL. MACHINE REPAIR, INDOOR FOLIAGE, FLOWER SUPPL Y, WASHING TOWELS, CELL PHONE REPAIR ETC. THE CLEANING CHARGES AMOUNTING TO ITA NO. 5393/DEL/2010 10 2 0X5 RS. 6,19,1161- HAVE BEEN PAID AS HOUSE KEEPING EXPE NSES FOR ITS OFFICE PREMISES ON A MONTHLY BASIS. IN SUPPORT THER EOF THE APPELLANT HAD PROVIDED BILLS FOR SUCH EXPENSES. LASTLY AN AMO UNT OF RS. 1,97,358/- HAS BEEN PAID TOWARDS ANNUAL MAINTENANCE CONTRACT OF OFFICE AIR-CONDITIONERS: AMC FOR HELLO MINERAL WATE R: DOOR ACCESS AND IBM SERVER OFFICE. IN VIEW OF THE DETAILS OF EXPENDITURE PROVIDED BY T HE APPELLANT AND VERIFICATION THEREOF THROUGH THE BILLS/ VOUCHERS SU BMITTED IN FORM OF PAPER BOOK IT IS OBSERVED THAT ALL THESE EXPENSE AR E ALLOWABLE AS REVENUE EXPENSES U/S 3 7( I) OF THE IT ACT AS THESE HAS BEEN INCURRED FOR PURPOSES OF BUSINESS. IN FACT FROM THE ORDER OR THE AO IT IS OBSERVED THAT EVEN HE HAS NOT QUESTIONED THE BUSINESS PURPOSE OR GENUINENESS OF THESE EXPENSES AND HAS RATHER DIS ALLOWED THESE EXPENSES HOLDING IT AS CAPITAL IN NATURE UNDER EXPL ANATION-1 TO SECTION 32(1) OF THE ACT AND HAS ALLOWED DEPRECIATI ON ON THE SAME. AS HAS ALREADY BEEN DISCUSSED IN DETAIL ABOVE NONE OF THESE EXPENSES ARE CAPITAL IN NATURE AND THEREFORE THE QU ESTION OF THESE EXPENSES FALLING WITHIN THE MEANING OF SECTION 32 O F THE IT ACT ITSELF AND THEREFORE CAPITALIZATION OF THESE EXPENS ES AND ALLOWING DEPRECIATION THEREON DO NOT ARISE. IN VIEW OF THE ABOVE THE ADDITION ON ACCOUNT OF EXP ENDITURE ON REPAIR AND MAINTENANCE FOR RS. 1,44,25,239/- IS DIR ECTED TO BE DELETED. ACCORDINGLY 10% DEPRECIATION ALLOWED BY TH E AO SHALL ALSO BE WITHDRAWN. ACCORDING TO US THESE EXPENDITURE ARE PURELY OF REV ENUE IN NATURE AND THE ASSESSEE OBTAINS NO ADVANTAGE OF ENDURING NATURE. T HESE ARE PURELY ROUTINE, MISCELLANEOUS EXPENDITURE, RENT CHARGES, CLEANING C HARGES AND REPAIRS ON COMPUTER & OTHER EQUIPMENTS AND CANNOT BE HELD TO C APITAL EXPENDITURE BY ANY STRETCH OF IMAGINATION. ON PERUSAL OF THE ORDER OF LD CIT (A) AND DETAILS OF EXPENDITURE SHOWN TO US, WE ARE NOT INCLINED TO UPH OLD THAT THESE EXPENDITURE ARE OF CAPITAL IN NATURE. THE CONTENTION OF THE RE VENUE THAT HONBLE SUPREME COURT HAS HELD IN CIT VS. M/S. SARAVANA SPINNING MI LLS PVT. LTD. 293 ITR 201 PLEADING THAT THE MOST OF THE EXPENDITURE ARE NOT I N THE NATURE OF CURRENT REPAIR ITA NO. 5393/DEL/2010 11 2 0X5 EXPENDITURE BUT ACCUMULATED REPAIRS SO EVEN THOUG H THE EXPENDITURE IS REVENUE IN NATURE, SAME IS NOT ALLOWABLE. WE FIND THAT THE RELIANCE ON THIS DECISION BY THE REVENUE IS MISPLACED AS IN THAT CASE, HONBLE S UPREME COURT WAS CONCERNED ABOUT THE MODERNISATION AND REPLACEMENT EXPENSES ON THE TEXTILE MILL AND IT WAS HELD THAT IT WAS NOT ALLOWABLE. IN THE PRESENT CASE , THE ISSUE IS NOT OF REPAIRS ON PLANT AND MACHINERY BUT RELATED TO EXPENDITURE ON B UILDING, FURTHER THE BUILDING IS ALSO NOT OWNED BY THE ASSESSEE BUT IS A RENTED P REMISES. THE EXPENDITURE WOULD BE DEALT WITH BY THE PROVISION OF SECTION 30, WHICH IS AS UNDER:- IN RESPECT OF RENT, RATES, TAXES, REPAIRS AND INSURANCE FOR PREMISES, USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION , THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED-- (A) WHERE THE PREMISES ARE OCCUPIED BY THE ASSESSEE -- (I) AS A TENANT, THE RENT PAID FOR SUCH PREMISES; A ND FURTHER IF HE HAS UNDERTAKEN TO BEAR THE COST OF REPAIRS TO THE PREMI SES, THE AMOUNT PAID ON ACCOUNT OF SUCH REPAIRS; (II) OTHERWISE THAN AS A TENANT, THE AMOUNT PAID BY HIM ON ACCOUNT OF CURRENT REPAIRS TO THE PREMISES; (B) ANY SUMS PAID ON ACCOUNT OF LAND REVENUE, LOCAL RATES OR MUNICIPAL TAXES; (C) THE AMOUNT OF ANY PREMIUM PAID IN RESPECT OF IN SURANCE AGAINST RISK OF DAMAGE OR DESTRUCTION OF THE PREMISES. EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT THE AMOUNT PAID ON ACCOUNT OF THE COST OF REPAIRS REFER RED TO IN SUB- CLAUSE (I), AND THE AMOUNT PAID ON ACCOUNT OF CURRE NT REPAIRS REFERRED TO IN SUB-CLAUSE (II), OF CLAUSE (A), SHAL L NOT INCLUDE ANY EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE. ITA NO. 5393/DEL/2010 12 2 0X5 ON READING OF THE ABOVE SECTION, THE ACCUMULATED RE PAIRS ARE NOT ALLOWED WHEN THE ASSESSEE OWNS BUILDING AND THEREFORE AS A TENANT COST OF REPAIRS TO THE PREMISES IS ALLOWABLE WHETHER THEY ARE ACCUM ULATED OR CURRENT. 10. FURTHER, REGARDING THE ISSUE OF ADMISSION OF ADDIT IONAL EVIDENCES BY THE CIT (A) , WE ARE OF THE VIEW THAT AFTER OBTAINING REMAND REPORT OF THE LD AO HE HAS DECIDED THE ISSUE ON MERIT. HOWEVER, ON L OOKING AT THE GROUNDS OF APPEAL OF THE REVENUE, WE DID NOT FIND ANY SUCH GROUND. REVENUE HAS NOT TAKEN A GROUND IN ITS APPEAL AGAINS T THE ADMISSION OF ADDITION EVIDENCE THEREFORE THE VARIOUS DECISIONS C ITED BEFORE US OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MA NISH BUILD WELL PVT. LTD. AND OF SUPREME COURT IN THE CASE OF M/S. DEEP AK AGRO FOODS VS. STATE OF RAJASTHAN & ORS (2008)-TIOL-134-SC-CT(SUPR A) DO NOT APPLY TO THE FACTS OF THIS CASE. FURTHERMORE THE REQUEST O F REVENUE TO SET ASIDE THE APPEAL TO THE FILE OF LD. AO ALSO CANNOT BE AC CEPTED AS THAT WOULD NOT SERVE ANY PURPOSE AS THE LD.AO HAS GOT AN OPPORTUNI TY TO FRAME ITS CASE AGAINST THE ASSESSEE AT THE ASSESSMENT STAGE AND F URTHER NEXT TIME AT THE STAGE OF HEARING BEFORE CIT (A) WHERE THE REMAND R EPORT IS SUBMITTED. NOW WE DO NOT FIND THAT SETTING ASIDE ISSUE TO THE FILE OF LD. AO WILL SERVE ANY PURPOSES AS ON THE FIRST TWO OCCASIONS E ITHER THE LD OA HAS NOT CARRIED ON PROPER EXAMINATION OR ON EXAMINATION N OTHING ADVERSE AGAINST THE ASSESSEE HAS BEEN FOUND. ON EXAMINATION OF THE DETAILS OF EXPENDITURE, WE ALSO COULD NOT FIND THAT ANY OF TH E EXPENDITURE INCURRED ITA NO. 5393/DEL/2010 13 2 0X5 BY THE ASSESSEE ARE CAPITAL IN NATURE. FURTHER, DU RING THE COURSE OF HEARING BEFORE US THE LD DR HAS ALSO REFERRED THE VARIOUS VOUCHERS AND BILLS EXTENSIVELY AND COULD NOT POINT OUT THAT H OW THESE EXPENDITURE ARE CAPITAL IN NATURE AND WHAT KIND OF BENEFIT OF END URING NATURE IS DERIVED BY THE ASSESSEE. THEREFORE SETTING ASIDE THE ISS UE BACK TO THE FILE OF THE LD. AO DOES NOT SERVE ANY PURPOSE. IN VIEW OF THE A BOVE FACTS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) I N HOLDING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ARE REPAIR AN D OTHER EXPENDITURE AND ARE ALSO ALLOWABLE U/S 30A(I) AND 37(1) OF THE INCOME TAX ACT AND THEY ARE NOT CAPITAL EXPENDITURE IN NATURE. WE CON FIRM THE FINDING OF THE LD. CIT(A) AND THEREFORE GROUND NO. 2 OF THE APPEAL IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE, 2016 SD/- SD/- (H.S. SIDHU) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 2ND JUNE, 2016 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER AR REGISTRAR